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SMSF and investing in property

While using a self-managed super fund (SMSF) to buy an investment property has become increasingly popular, members must carefully consider whether it supports their overall investment strategy before they go ahead with this investment approach.

There is a condition that the SMSF trustee or any of their relatives cannot buy the property with the intention to live in it. The sole purpose of using an SMSF to buy a property must be to build wealth for retirement. With this in mind, a member must buy an investment property for logical reasons and not because they are emotionally attached to it. The importance of the property’s return on investment outweighs the property’s views and facilities.

Before purchasing an investment property, a SMSF member must evaluate how long it will take them to repay the debt. Current rent rates and the level of superannuation payments made by members should provide an indicator of whether it will be paid off in time for retirement. Otherwise, they may need to factor in selling the investment at the time of retirement or putting off their retirement.

Members must also take into consideration that some investment properties are more suited to a SMSF, such as properties with low ongoing and maintenance cost and a high gross rental return. They should avoid buying investment properties with high ongoing maintenance cost as these will only increase unnecessary costs and reduce the net rental income.

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News

Amnesty means that 24,000 businesses own up to underpaying Aussies superannuation

September 24, 2020

An amnesty scheme which ended earlier this month has caused around 24,000 businesses to admit to underpayment of their worker’s super. A total of 588 million dollars will be distributed to almost 400,00 individuals.

The scheme, which covered payments from the introduction of super in 1992, gave employers the opportunity to come clean without any consequences as long as they paid the unpaid super as well as 10% interest for every year the money was overdue.

The ATO will be directing its attention at any businesses that did not admit fault and these businesses will face severe penalties.

Many individuals are looking to access their superannuation early in order to have support during these times. Although there is criticism of early access to super, this facility has been helpful to many families to keep afloat.